Ch7Student: ___________________________________________________________________________Rhett Corporation acquired 80 percent of Ennis Corporation's common stock at underlying book value. The companies reported the following information for the years 2007 and 2008.During 2007, one company sold inventory to the other for $100,000. The inventory originally cost the transferring affiliate $80,000. As of the end of 2007, 30 percent of the inventory exchanged in the intercompany transaction remained in the purchasing affiliate's ending inventory. In 2008, the remaining inventory was sold to unrelated parties for $50,000.1.Consider the information given above. If the intercompany sale was downstream, by what amount must inventory be reduced in the consolidation workpaper to reflect the correct balance in the consolidated balance sheet at December 31, 2007? A. $ 0.B. $ 6,000.C. $20,000.D. $30,000.2.Consider the information given above. If the intercompany sale was downstream, 2007 consolidated net income should be: 3.Consider the information given above. If the intercompany sale was upstream, total revenue reported in the consolidated income statement for 2007 should be:

This
preview
has intentionally blurred sections.
Sign up to view the full version.

4.Consider the information given above. If the intercompany sale was upstream, 2007 consolidated net income should be: 5.Consider the information given above. If the intercompany sale was upstream, 2008 consolidated net income should be: A. $485,600.B. $490,400.C. $495,200.D. $496,400.6.Consider the information given above. If the intercompany sale was upstream, total consolidated cost of goods sold for 2008 should be: 7.Consider the information given above. If the intercompany sale was upstream, what amount of income would be assigned to the noncontrolling interest in the 2008 consolidated income statement? 8.Consolidated net income may include the parent's separate operating income plus the parent's share of the subsidiary's reported net income:

This is the end of the preview.
Sign up
to
access the rest of the document.